Hyundai Motor's S.Korean union approves strike action

Union negotiators led by Park You-ki will meet on Thursday to decide when to stage the walkout after 77 percent of Hyundai's 48,806 unionised workers in South Korea approved the strike actionReuters | July 14, 2016, 11:21 IST

SEOUL: Hyundai Motor's unionised workers in South Korea voted to go on strike for a fifth year in a row after wage talks broke down, a spokesman said on Thursday, adding to the automaker's troubles as it battles a sales slowdown.

A prolonged strike could hurt sales of high-demand cars such as the Tucson sport utility vehicle as the company heads for an expected 10th consecutive drop in quarterly profit in the April-June period, analysts said.

Union negotiators led by Park You-ki will meet on Thursday to decide when to stage the walkout after 77 percent of Hyundai's 48,806 unionised workers in South Korea approved the strike action, the spokesman said.

"The overwhelming support is a natural result of the anger of our 48,000 union workers," the union said in a statement.

Hyundai Motor shares fell as much as 3.0 percent and Kia Motors shares declined 1.9 percent in the wider market that was down 0.2 percent as of 1242 GMT.

"A strike is an annual event for Hyundai Motor, but this is weighing on investor sentiment," Eim Eun-young, an auto analyst at Samsung Securities, said.

Hyundai Motor, the world's fifth-biggest carmaker together with affiliate Kia Motors, posted a 0.9 percent fall in sales in the first half, dragged lower by an emerging market slowdown.

The company has been hit by strikes in all but four of the union's 29-year history. The automaker usually makes up for lost production later each year.

This year, the union is demanding a 7.2 percent rise in the basic monthly wage and performance pay totaling 30 percent of the automaker's 2015 net profit.

Other demands include giving employees the right to refuse to be promoted so that they can maintain their union membership.

The company is pushing to freeze wages, revamp the wage structure and expand the so-called "peak-wage system," the union said.

A Hyundai Motor representative was not immediately available to comment.

Wages talks were under way at Kia Motors and if the union failed to reach a deal it planned to hold a strike vote on Aug. 8, a union official said.